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Amazon's (AMZN) Drones Delivery Fleet Gets FAA Approval

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Zacks Equity Research
·3 min read
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Amazon AMZN recently received an approval from the Federal Aviation Administration (“FAA”) that allowed it to test commercial deliveries through its drone fleet.

Reportedly, the company plans to use MK27 drones, which have a maximum 5 lb carrying capacity.

The latest move bodes well for Amazon’s strengthening delivery system, which is aiding it in enhancing shopping experience.

The company’s growing customer-oriented approach is evident from its focus on using drones to ensure quick deliveries. This customer-centric approach is aiding the company to further strengthen presence in the e-commerce space.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Delivery Drone Market Holds Promise

The growing proliferation of online shopping driven by increasing penetration of Internet and smartphone usage led to the emergence of delivery drones that are capable of making rapid deliveries.

Further, demand for the drones is being aided by innovation in cargo transportation.

Per a report from MarketsandMarkets, the global drone logistics and transportation market is expected to hit $11.2 billion by 2022, and is likely to witness a CAGR of 21.01% between 2022 and 2027 to reach $29.06 billion by 2027.

We believe Amazon is expected to rapidly penetrate this booming market with the help of innovative delivery drones that are based on AI.

AI techniques help these drones to navigate properly, reach their destination and drop off the packages by detecting telephone wires, people, animals and properties on the ground. Moreover, AI-based sensors will aid the drones in flight without threatening traditional aircraft.

Intensifying Competition

The potential of the delivery drone market is alluring enough to attract many other companies to make advances into it.

Moreover, companies like Alibaba BABA, JD.com JD and Alphabet’s GOOGL Google, among others, have already introduced drones in the e-commerce market, thereby intensifying competition.

Nevertheless, Amazon’s drones are capable of tilting and flying just like a plane and this separates them from others that can fly only horizontally.

This feature remains a major positive as it will help these drones to avoid any unwanted collision with any other aircrafts.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
JD.com, Inc. (JD) : Free Stock Analysis Report
 
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
 
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